* Olympus Corporation is a Japanese manufacturer of optical equipment. The company is listed on the Tokyo Stock Exchange and carries a ¥1,055 billion market capitalization (approximately $10.9 billion). Olympus employs 30,697 people worldwide and, while known for their cameras in the US, they lead the global market for endoscopes.
* In 2008 Olympus purchased British medical equipment maker Gyrus Corp for $2.2 billion. The firm also spent $965 million purchasing three “small venture firms,” Altis, Humalabo and News Chef.
* On 4/1/11, British-born Michael Woodford was promoted to President and CEO. He was the first non-Japanese CEO of the firm. On 10/14/11 Mr. Woodford was ousted. The Board cited differences in management style; however, as the scandal broke, it became clear Mr. Woodford was fired because he questioned the accounting related to the acquisitions.
* It was eventually disclosed that Olympus had paid a $687 million dollar M&A fee to the firm that advised on the Gyrus purchase. The fee equated to 31% of the purchase price for Gyrus, the highest M&A fee ever paid. Within a year of the purchases, Olympus wrote down the value of the other 3 acquired firms by $751 million, over 75% of the total acquisition cost.
* On 10/26/11 Tsuyoshi Kikukawa, the firm’s Chairman, President prior to Mr. Woodford and acting President after Mr. Woodford’s dismissal, resigned amid allegations that the exorbitant fees and prices paid for the acquisitions were part of a Tobashi scheme to cover up losses that dated back to the 1990’s.
* Tobashi is Japanese for “fly away” and describes a financial fraud wherein investment losses are shifted by moving securities, usually at or very near cost, between multiple investor accounts. A weakened dollar hurt profits for Japanese firms in the 1980’s so many firms turned to the booming Japanese stock market as a way to make up for the currency related drop in profits. Tobashi...